Internet access to double in next 5 years

Arthur Goldstuck, MD World Wide Worx, researcherJOHANNESBURG, 24 March 2009:- South Africa’s Internet population is expected to grow as much in the next five years as it has in the 15 years since the Internet became commercially available in South Africa.

This is among the startling conclusions contained in the Internet Access in South Africa 2008 report, released today by World Wide Worx. The report shows that the number of Internet users in South Africa grew by 12.5% to 4,6-million in 2008 – the first time since 2001 it has grown by more than 8%. The increased growth rate is expected to continue for the next five years, taking the Internet user population to the 9-million mark by 2014.

“Four major factors will drive this growth,” says Arthur Goldstuck, managing director of World Wide Worx.

“The first and most obvious development is the arrival of a new undersea telecommunications cable at the end of June. It will increase South Africa’s maximum international bandwidth fivefold, and the actual capacity that was available until the end of last year will increase 30-fold. It will gradually bring down the cost and increase the capacity available to consumers and business – but not overnight.”

The second factor is the granting of telecommunications licences to all Internet service providers who wish to upgrade existing licences, allowing them to build their own networks.

“While we won’t see even a tenth of the 600 existing ISPs setting up networks, enough of them will emerge from under the radar to give consumers and business a new world of choice,” says Goldstuck.

These networks will be able to take advantage of the new undersea cable, which will allow service providers to buy bandwidth capacity at wholesale prices and repackage and resell it as they wish. This means that the new generation of service providers will be able to introduce business models that were never possible before.

The third factor is the rapid rate at which small and medium enterprises (SMEs) are migrating from slow dial-up connections to faster ADSL lines.

“The impact of these lines goes much further than merely the number of small businesses that connect,” says Goldstuck. “Our research shows that every SME using ADSL is connecting anywhere between one and 20 additional individuals to the Internet. This means that SMEs have taken over from large businesses as the biggest driver of Internet access in South Africa.”

The fourth factor is the growth of Internet access via cell phones. However, warns the report, this is not yet as big a factor as media hype suggests.

“The cell phone right now is a very crude device for accessing the Internet,” says Goldstuck. “We will need to see great improvements in both usability and people’s ability to use advanced features on their cell phones, and that will take another few years.”

The report also covers the prospects for as many as seven new undersea cables planned for the next three years, new trends in connecting schools and universities, the dramatic evolution of wireless broadband technology, and the extent to which other African countries have overtaken South Africa.

* For more information, email Arthur Goldstuck on Tel: +27 11 782 7003


Internet turnaround has begun in SA

In the past year, the Internet user base in South Africa has seen its highest rate of growth since 2001, increasing by 12.5% to 4,5-million.

This is the key finding of the Internet Access in South Africa 2008 study, released today by World Wide Worx. The study was backed by Cisco Systems, and the findings released during the Networkers at Cisco Live! conference in Johannesburg.

“The increase comes on the eve of the biggest shakeup in South African Internet access we’ve seen since the dawn of the commercial Internet in 1994,” says Arthur Goldstuck, MD of World Wide Worx. “It is only the beginning of a dramatic turnaround, and is occurring despite numerous obstacles in the way of growth.”

Among these obstacles has been a highly restrictive regulatory environment, with the Minister of Communications only deciding late in the year not to oppose a court ruling that would allow all network operators to supply their own infrastructure.

The evolution and changes in the telecommunications industry could not have come at a better time in South Africa. “We believe these changes will lead to sufficient levels of competition, increase access to Internet usage and in turn, increase global competitiveness and economic diversity,” says Reshaad Ahmed, Senior Manager of Cisco’s Internet Business Solutions Group.

“South Africa could, potentially, go from five major service providers to more than 300 overnight,” says Ahmed. “The combination of new licencees, policy directions, and municipality networks has set the stage for a highly competitive telecommunications marketplace, with consumers and businesses leading the charge toward choice, competition, and fair market value.”

Goldstuck describes the Minister’s decision as a pivotal moment, but one that should have occurred four years ago.

“In that time we saw growth slow to a near standstill, and the possibility of bringing access to underserviced area becoming ever more remote,” adds Goldstuck. “But the market has been anticipating this change, and numerous small, semi-legal networks have sprung up around the country in the past year. Many of these should emerge above the radar with their new licenses, along with new entrants into the market.”

The Internet Access in SA 2008 report shows that growth has come largely on the back of dramatic take-up of broadband offerings by small businesses, which alone accounted for half of the growth in the market, mainly through connecting office staff to their ADSL links. At the same time, the market as a whole has seen a continued dramatic shift from dial-up connections to broadband, with growth in both ADSL and 3G at more than 50%.

“We are seeing a broadband culture emerging in South Africa, held back only by the restrictions still placed on data capacity,” says Goldstuck. “These should start becoming a non-issue from the middle of 2009, as the first of the major new undersea cables enters operation. At that point, dial-up will effectively be dead as a connectivity option – it is more expensive, and utterly inappropriate to the changing nature of the Internet.

“Once everyone who is connected is on broadband or high-speed networks, the Internet will come into its own as an environment for business collaboration and personal interaction.”

The Seacom undersea cable, commissioned mainly by new market entrant Neotel, will increase South Africa’s international bandwidth 40-fold, and will mark the beginning of what World Wide Worx describes as a seismic shift in the Internet landscape in Africa. But it is only one of a series of new cables in the works, which will make the connectivity landscape completely unrecognisable for both South Africa and the rest of the continent by 2013.

“It spells the birth of an entirely new industry, and we are already seeing the market champing at the bit to become part of that industry,” says Goldstuck.

However, Cisco warns change won’t happen overnight.

“Only some of the 300-plus contenders will be in a position to manage their own net­works due to their ability to raise the necessary capital,” cautions Ahmed. “Those that do step up to the challenge must spend a significant amount of time building a business model that will be sustainable, innovative, and takes advantage of the strategic position with which a contender is faced, while employing the capabilities of existing service providers.

“We are therefore pleased with these findings as they indicate a positive trend for economic growth. We believe that pervasive broadband at the right price is a key enabler for economic prosperity.”

“It is imperative for all relevant stakeholders to drive broadband to encourage new services: skills, education, business interaction and lowering the cost of doing business,” Ahmed concludes.


How to choose ISP or consumer Internet access in South Africa

This is a portion of an interview for Huisgenoot magazine from 2007. I’m not even sure if it was ever published because the journalist was forced to redo the initial interview, which focussed on Skype to include a few questions about Internet access.


ADSL modem and network cable unpluggedThis is a portion of an interview for Huisgenoot magazine from 2007. I’m not even sure if it was ever published because the journalist was forced to redo the initial interview, which focussed on Skype to include a few questions about Internet access.

1. What are the different Internet access options available to South African consumers?

Dial-up: is the original mechanism used by home users to connect to the Internet access. Your computer connects to the Internet via telephone line. Your operating system like WindowsXP or Linux uses a modem to connect a computer and a telephone line to dial into an Internet service provider’s (ISP) node to establish a modem-to-modem link, which is then routed to the Internet. It is an analogue connection and by comparison the slowest Internet connection. Prices vary from R45 to R145 per month.

ISDN: is a circuit-switched telephone network system, designed to allow digital transmission of voice and data over ordinary telephone copper wires, resulting in better quality and higher data speeds than
are available with analogue. It was often used in videoconferencing because it provides simultaneous voice, video, and text transmissions. Pricing is a combination of monthly subscription + hours dialed into the Internet.

Broadband: is an “always-on” on Internet connection which can be both over fixed telephone lines (ADSL) or wireless connections. Research by Arthur Goldstuck predictes South Africa will have 1.37 million broadband users by end of 2008.

  • ADSL is the form of DSL of all broadband connections. Telkom launched commercial ADSL in 2002 and prices have come down several times since then. Bandwidth capacity and speed has increased now to where up to 4mbps is available. Most ISPs offer ADSL and prices range widely depending on how much bandwith you use. Beginners should start with 1Gig account and business users 3Gigs.
  • 3G: is the 3rd generation of cellphone standards and technology. 3G technologies enable cellphone network operators to offer users a wider range of more advanced services while achieving greater network capacity through improved efficiency. Pricing varies based on many different packages. You can purchase a contract and get the modem free; you can buy the moden and use pre-paid airtime; or you can use a 3G/HSDPA phone to connect using Bluetooth. HSDPA (High-Speed Downlink Packet Access) is a new mobile data protocol and is sometimes referred to as a 3.5G (or “3½G”) technology. It’s available from Vodacom, MTN, Cell C and Virgin Mobile.
  • iBurst: is based on IntelliCell technology from ArrayComm in the US. It uses radio frequencies with base stations and modems. Pricing vary from R49 to R1099 per month. They operate on a reseller model like ADSL so you can purchase it from most ISPs.
  • MyWireless: is a form of Internet connectivity that uses “wireless” technology by creating a radio-based connection to the Internet using network of specially erected towers (base stations). As such, MyWireless provides a secure Internet telecommunications platform at speeds of up to 512kbps. It’s similar to iBurst. Pricing varies from R499 to R1500 per month.

All internet connections require a modem unless you are using your cell phone as a modem. There are packages that includes free modems and some that don’t which can be more expensive per month.

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